Cher Exercise 13 1 (Static) Identifying Relevant Costs LO13 1) Svahn, AB, is a Swedish manufacturer of sailing yachts The company has assembled the information shown below that pertains to two independent decision making contexts Case A The company chronically has no idle capacity and the old Model B100 machine is the company's constraint Management is considering purchasing a Model B300 machine to use in addition to the company's present Model B100 machine The old Model B100 machine will continue to be used to capacity as before, with the new Model B300 machine being used to expand production This will Increase the company's production and sales The increase in volume will be large enough to require increases in fixed selling expenses and in general administrative overhead, but not in the fixed manufacturing overhead Case B The old Model B100 machine is not the company's constraint, but management is considering replacing it with a new Model B300 machine because of the potential savings in direct materials with the new machine The Model B100 machine would be sold This change will have no effect on production or sales, other than some savings in direct materials costs due to less waste Required Based on the information provided above indicate in the appropriate column whether each item is relevant or irrelevant to the decision context described in Case A and Case B change will have no effect on production or sales, other than some savings in direct materials costs due to less waste Required Based on the information provided above indicate in the appropriate column whether each item is relevant or irrelevant to the decision context described in Case A and Case B Case A Case B ces Item a Sales revenue b Direct materials c Direct labor d Variable manufacturing overhead e Depreciation Model B100 machine f Book value Model B100 machine 9 Disposal value Model B100 machine h Market value Model B300 machine (cost) i Fixed manufacturing overhead (general) Variable selling expense k Foed selling expense I General administrative overhead

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Cher Exercise 13 1 (Static) Identifying Relevant Costs  LO13 1) Svahn, AB, is a Swedish manufacturer of sailing yachts  The company has assembled the information shown below that pertains to two independent decision making contexts  Case A The company chronically has no idle capacity and the old Model B100 machine is the company's constraint Management is considering purchasing a Model B300 machine to use in addition to the company's present Model B100 machine The old Model B100 machine will continue to be used to capacity as before, with the new Model B300 machine being used to expand production  This will Increase the company's production and sales  The increase in volume will be large enough to require increases in fixed selling expenses and in general administrative overhead, but not in the fixed manufacturing overhead Case B The old Model B100 machine is not the company's constraint, but management is considering replacing it with a new Model B300 machine because of the potential savings in direct materials with the new machine The Model B100 machine would be sold  This change will have no effect on production or sales, other than some savings in direct materials costs due to less waste Required  Based on the information provided above indicate in the appropriate column whether each item is relevant or irrelevant to the decision context described in Case A and Case B  change will have no effect on production or sales, other than some savings in direct materials costs due to less waste  Required  Based on the information provided above indicate in the appropriate column whether each item is relevant or irrelevant to the decision context described in Case A and Case B  Case A Case B ces Item a Sales revenue b  Direct materials c  Direct labor d Variable manufacturing overhead e Depreciation   Model B100 machine f Book value Model B100 machine 9 Disposal value Model B100 machine h Market value Model B300 machine (cost) i Fixed manufacturing overhead (general)   Variable selling expense k Foed selling expense I General administrative overhead

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Cher Exercise 13-1 (Static) Identifying Relevant Costs [LO13-1) Svahn, AB, is a Swedish manufacturer of sailing yachts.

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Intermediate Accounting

Cher Exercise 13-1 (Static) Identifying Relevant Costs [LO13-1) Svahn, AB, is a Swedish manufacturer of sailing yachts.

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Intermediate Accounting

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